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Financials

UPDATE 1-Irish banks borrow more from central bank

* Borrowings from Irish central bank 51.5 bln euros end Dec

* ECB borrowings 132 bln euros end Dec vs 136 bln end Nov

(Adds more detail)

DUBLIN, Jan 14 (Reuters) - Ireland’s banks increased their reliance on funding from their own central bank in December but trimmed their borrowings from the European Central Bank (ECB), data showed on Friday.

Irish banks have been hit by an outflow of corporate deposits as companies lost faith in the struggling sector and have also been locked out of interbank lending markets as the country was forced to seek outside aid.

An 85 billion euros bailout from the EU and the IMF, agreed last month, is designed to shore up confidence in the country and its banks and slowly wean lenders off their dependence on central bank funding.

Ireland’s central bank lent banks 51.1 billion euros in special funding at the end of December, a 6.4 billion euros increase on the previous month but an easing of previous monthly jumps.

But the banks’ reliance on funding from the European Central Bank eased slightly, with borrowings of 132 billion euros at the end of December compared with 136 billion euros at the end of November.

The central bank did not give the breakdown between domestic banks and foreign banks based in Ireland but last month it said that domestic lenders accounted for 70 percent of ECB borrowings in November.

A crisis in Ireland’s banking sector forced the government to request external assistance last month amid concerns the state could not afford to keep bailing the banks out.

Some 35 billion euros of the external assistance will be channeled to the banks with the remainder used to cover Ireland’s sovereign borrowing costs.

Reporting by Dublin bureau; editing by Patrick Graham

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